StockWatch (Mar 02-07, 2009): PSEi, MER

PSEi (Chart: Daily Resistance: 1900 Support: 1818)

Last week was a lazy week for the index. Again, nothing much happened except for the large volume last Monday, but that volume did not translate to any large movement. The index is still moving sideways hovering just below the 65 day MA. It’s getting harder to gauge what will happen next if the index continues its sideways movement this week. We are currently in index limbo now, RSI is neither overbought nor oversold and MACD is also not giving clear picture of where we are heading. Stochastics is the only indicator that I am using that is atleast suggesting that it would either be a sideways to downward movement for this week. The only good sign I am seeing from the chart is that the MACD is consolidating near the center line and the index is maintaining its position near the 65 day MA. But I am optimistic that something will happen soon, this sideways movement will not last long, so better be prepared to react fast.


MER (Chart: Daily Resistance: 92 Support: 7.50)

MER is definitely one stock to avoid for now. It is very clear from the chart that its attempt to move higher is not supported by the volume which is a sign of weakness. If the stock is able to create a higher high by next week, check the following: 1.) MACD and RSI -The creation of a higher high should also translate to a new higher high in MACD and the RSI, if not, then we have a bearish divergence. 2.) Volume- The attempt at a higher high should be accompanied with volume, otherwise, the stock will have a hard time moving upward any further.